Data Series: An Interview with John Beccia, General Council of Circle Internet Financial
The DATA annual meeting has quite the star studded list of speakers. Here’s who will be sharing their thoughts in DC next week:
Keynote: Benjamin Lawsky, New York State Superintendent of Financial Services
Keynote: David Andolfatto, Vice President, Federal Reserve Bank of St. Louis
Adam Shapiro (Director, Promontory Financial Group, ex-Chief of Staff, UK FCA)
Berin Szoka, Founder and President, TechFreedom
Carter Dougherty, Bloomberg
Constance Choi, DATA Secretariat
Dan Kaminsky, Security Researcher
Donald Terry, Center for Financial Inclusion
Edan Yago, Chief Executive Officer, Epiphyte
Elizabeth Rossielo, CEO, Bit Pesa
Erik Voorhees, Co-Owner, Coinapult
Garrett Graff, Editor, The Washingtonian
Jason Lamb, Deputy Director on the FSP, Gates Foundation
Jerry Brito, Mercatus Institute
John Beccia, Circle Internet Financial
John Clippinger, MIT Media Lab, ID3
John Collins, Staffer, Senator Carper
Jody Westby, CEO, Global Cyber Risk LLC
Joshua Fairfield, Professor of Law, Washington & Lee University School of Law
Marc Hochstein, Executive Editor, American Banker
Michael Faye, Co-Founder and Chairman, GiveDirectly
Mike Stevens, Conference of State Banking Supervisors
Pat O’Brien, fmr Asst Secretary, Terrorist Financing and Financial Crimes at Treasury
Patrick Byrne, Chairman & CEO, Overstock.com
Patrick Murck, Bitcoin Foundation
Stan Stalnaker, Founding Director, Hub Culture and Ven Currency
Stuart Tyron, Deputy Special Agent in Charge, US Secret Service, DHS
Susan Athey, Professor of Economics, Stanford
Valerie Szczepanik, Securities & Exchange Commission
Wences Cesares, Founder, Xapo
Zach Warmbrodt, Reporter, Politico.com
One of these speakers is John Beccia, who is on the DATA board and has an extensive career in financial law and bank regulation.
Ruben Alexander: Talk about your background before you were chosen as a DATA board member.
John Beccia: My background is more on the traditional banking side. My most recent job was with Boston Private Financial Holdings, Inc, a publicly traded bank holding company, which is focused on private banking and wealth management. I was doing a lot of the legal work there overseeing bank regulatory, compliance, and anti-money laundering matters as the BSA Officer. I did a lot of compliance and bank regulatory work dealing with issues like deposit, lending, and trust company issues..
Before that I was with another bank called Investor’s Bank and Trust, which is also in Boston, doing similar bank regulatory and compliance work.
Previously, I was down in Washington DC at The Financial Services Roundtable, which is a trade association for the top 100 financial services companies. I was the Chief Regulatory Counsel. I worked on a variety of issues for banks, securities and insurance firms. I handled legislative and regulatory matters and interfaced with a lot of the agencies on the Federal and State level, including the SEC, banking regulators and the Department of Justice. The focus of this position was government relations and assisting member companies with legal and compliance issues.
Can you talk about how you were introduced to Bitcoin?
I was approached by our CEO Jeremy Allaire who has built a number of successful technology companies in the past. He described to me his vision for the possibility of digital currencies and Bitcoin and how they could make dramatic changes to the current payment system. He was very aware of the regulatory and compliance issues associated with this industry. He had the foresight to understand that he needed to bring in someone with a strong background in those areas.
He approached me and the more I looked at it, I noticed the ability [Bitcoin] had to disrupt the payment space. There are a lot of opportunities under the existing payment system because it isn’t as efficient and cost effective as it should be. The more I looked at digital currency, I saw a real opportunity. And on top of that, seeing Jeremy and his background and our investors and the quality and the depth of the team he has put together along with the board of directors, it was really attractive to make the jump from banking into this arena.
If Bitcoin are going to be taxed, what do you think is the best way to tax them?
What I can say is that I appreciate [that] the IRS has taken action. The industry as a whole needs certainty around these areas to move forward, from an everyday business standpoint the ability to have auditors audit financials for both companies that are in this space and for consumers who file tax returns. This is important guidance, and I know what the IRS has put out is a good first step.
I think more obviously needs to be done. We need to look at the real impacts of this and see what effect it will have as the digital currency matures and we see a lot more payment transactions occur. We’ll need to see what adjustments need to be made to the guidance, because I still think there are enhancements that could be made to what the IRS put out.
This is part of the reason why DATA is an important organization, because we need to have everybody at the table the industry and all other constituents like audit firms, regulators, and the IRS looking at this and understanding the consequences of these actions and ensure that we don’t stifle important technological advancements going forward.
Do you expect the IRS notice to change based on the feedback they receive this year?
I would think so. Most of the regulatory agencies that we have been dealing with in the industry are very receptive to comments and I would not think the IRS would be an exception.
It just underscores the importance of the industry having a voice and making sure that they reach out when those meetings take place so that changes can be made.
What motivated you to get a law degree?
I’ve always had an academic interest in the law for both the US and international legal system. I’ve been interested in all types of law.
After I graduated from college, I started my career in the financial services industry and really gravitated towards that space and towards the corporate law perspective. I was always interested in that area. And I pursued not only a legal degree, but also a Masters in Law, Banking, and Financial Law at a program in Boston University where I now teach.
Digital currency is certainly cutting edge and there is a lot going on from a regulatory standpoint. I have been no stranger to rapidly changing laws and regulations having just come from banking. With all the changes that happened post-Dodd Frank, it has been interesting ride from a career and academic perspective.
If you were to give advice to lawyers who were starting to take on cases related to cryptocurrencies, what type of advice would you give them?
What type of cases?
The IRS notice was released 2 weeks before taxes are due, so there may be Bitcoin users seeking legal advice for certain matters related to audits and filing taxes.
The advice I would give is to understand that this is a rapidly changing space and you will need to do your due diligence so that you have a real understanding of what the issues and implications are. From a legal perspective, not only for the lawyers practicing in this industry but anybody, be transparent with all your dealings with regulatory bodies or law enforcement.
For the most part, these types of groups need to understand there are very complicated [cryptocurrency] subjects and there is a lot of education going on back and forth with both groups. It is important to be proactive and transparent when working on these issues.
Have you gotten feedback from any banks learning about virtual currencies for the first time?
The banking industry is still reticent to work with digital currency firms and to provide banking services for them. There has been somewhat of an initial thaw, but I think they are still trying to understand what the risks are. While banks see potential business opportunities to bank digital currency firms, the risk management and compliance departments are trying to get comfortable with the risks, which is understandable.
The other piece on top of that is that these bank’s regulators also need to be comfortable with them banking these digital currency firms. That is why we need more regulatory certainty for both banks and their regulators to get a certain comfortable level.
At that point, it becomes a risk management exercise to see if individual companies, like Circle, have appropriate compliance program in place to mitigate risks.
Who approached you about becoming a board member for DATA? What was your initial response?
I had several conversations with different members within the industry about the possibility. During these conversations it became apparent that because the technology is evolving quickly, and the regulatory issues that impact Bitcoin are so important, there was a need for the industry to combine efforts to collectively and thoughtfully come up with a set of best practices. We also wanted to have a collective unified approach to interfacing with regulators, lawmakers and others. It is an important that we have that unified voice.
Based on my background, I thought I could contribute to that effort. I thought it was worthwhile to try to be elected to a board seat. Hopefully, now that we have a board in place are starting to develop best practices and other frameworks for the industry, we’ll have a positive impact going forward.
In Edan’s interview, he said DATA wouldn’t just focus on the US, but help other industries and governments around the world. Is your plan to focus more on the US this year or will you scatter your efforts in different parts of the world?
Bitcoin and digital currencies are a global technology and could bring a global change in payment systems. Therefore, I think we have to focus on both US and international regulatory regimes. We need to be proactive and focus efforts where there is action happening now. A lot of that is happening at the state and federal level in the US, but it’s also happening at an international level.
We are going to work with anyone who is willing to work with us and listen to us. It has been encouraging at this point, because there has been a definite willingness and interest in this space.
We are still at a very nascent stage with this technology, and you are seeing quite a bit of broad interest. I think it is a very positive thing. I think we will get to a place that makes sense and allows the technology to evolve, thrive, and get to the next level.
This interview is part of a series of interviews of the DATA board members Edan Yago, Patrick Murck, Constance Choi, John Beccia, and Stan Stalnaker.
The DATA annual meeting will be in Washington DC on April 10-11. To find out more, visit DATA’s annual meeting website.